Recently reports have surfaced that China is building a second overseas naval base, one in Pakistan. However, it is important to distinguish fact from knee-jerk speculation, especially when so far there is a paucity of hard evidence to suggest this is true.

To answer the question in the headline, it is only natural for the People's Liberation Army (PLA) to make plans to establish overseas facilities to support its assets, because that is what militaries do. The real question, then, is whether China is enacting concrete plans right now to build a base on Pakistani soil.

It is undeniable that China will gradually establish more naval facilities on the periphery of the Indian Ocean. Even the Pentagon's annual report entitled 'Military and Security Developments Involving the People's Republic of China 2017' predicted China will establish additional overseas "in countries with which it has a longstanding friendly relationship and similar strategic interests, such as Pakistan, and in which there is a precedent for hosting foreign militaries".

While the USA did not name Gwadar, this location has long been touted as the likely location of a second base for China. The Pentagon added, "A more robust overseas logistics and basing infrastructure would also be essential to enable China to project and sustain military power at greater distances."

The Washington-based The Daily Caller published an op-ed on 1 January in which it claimed, "In the last two weeks, meetings held between high-ranking Chinese and Pakistani military officers indicate that a new Chinese military facility will be built on the Jiwani peninsula between Gwadar and the Iranian border. The plan is said to include a naval base and an expansion of the already existing airport on the peninsula, both requiring the establishment of a security zone and the forced relocation of long-time Balochi residents."

The distance between Gwadar Port and Jiwani is about 60km, and it is another 20km to the Iranian border. However, the report was scant on detail supporting this claim of a PLA base. Indeed, given the investment China is putting into Gwadar, is it likely to establish a base so far away and so close to the border? Iran, for one, would not be enamored with the idea.

To date, this claim of a Chinese naval base in Jiwani remains isolated. Nonetheless, another voice adding weight to the establishment of a Chinese base near Gwadar is a South China Morning Post story published on 5 January. It included this statement: "Another source close to the People's Liberation Army confirmed that the navy would set up a base near Gwadar similar to the one already up and running in Djibouti." The report related that the new base "near the Gwadar port on the Arabian Sea would be used to dock and maintain naval vessels, as well as provide other logistical support services" because Gwadar, as a commercial port, could not meet military needs.

China and Pakistan may well be planning such a controversial facility, especially given the privileged access that the Hong Kong-based newspaper is sometimes given by the Chinese authorities. In that case, ongoing frantic media reports could be construed as welcome, for they serve as a kind of trial balloon to gauge international reaction. Every time these reports surface, the inevitability of the PLA Navy (PLAN) setting up a base in Pakistan becomes a little more embedded in the public's consciousness.

Berthing space of 600m is allocated to the navy, plus there is a joint tri-service cantonment. A 2016 report by the Senate Defense Committee noted the naval base is "a significant addition to our maritime infrastructure," but that it is "primarily a commercial venture [that] affords substantial operational flexibility to the navy". The Pakistan Maritime Security Agency is basing 600-tonHingol-class patrol vessels there too.

A report entitled 'The China-Pakistan Economic Corridor - Barriers and Impacts' by Arif Rafiq, published last year by the United States Institute of Peace (USIP), stated, "The navy is the least funded of Pakistan's three military services, and it is unlikely that Islamabad would spread itself thin by devoting a considerable number of naval assets to Gwadar. Doing so would require acquisitions well beyond Pakistan's budgetary capabilities. The notion of commercial ports such as Gwadar serving a dual purpose, though, has potential. They can serve military purposes in wartime, for example."

Jinnah Naval Base at Ormara, positioned halfway between Karachi and Gwadar, is a more critical naval base than Gwadar for Pakistani maritime security. Submarines are shifting there, for example. The PN also has a facility at Jiwani to help monitor traffic in the Arabian Sea, while an air base at Turbat was inaugurated last March. Karachi remains the navy's most important base.

Rumors of a Chinese base at Gwadar have long been bandied about. In November 2016, for example, an unnamed PN official was quoted by The Express Tribune, "China would also deploy its naval ships in coordination with Pakistan Navy to safeguard the port and trade under the CPEC." To be sure, the PN would be keen to have PLAN vessels based at its ports, as it would provide an extra counterbalance to the Indian Navy.

The Chinese Ministry of National Defense unsurprisingly rubbished such ambitions, though: "Talk that China is building a military base in Pakistan is pure guesswork." The caveat must be given that denials from China should never be taken at face value, though, so such evasive wording does little to diminish Indian angst.

Long before we see a Chinese base appearing in Gwadar, however, it would be natural to witness PLAN vessels berthing there to refuel and resupply. This is the logical progression witnessed in Djibouti, where China's first overseas base exists. There is a precedent for such logistical port visits too, with a Chinese submarine visiting the Colombo South Container Terminal in 2014, and a submarine docking at Karachi to refuel. China knows that to establish a formal base anywhere in Pakistan will create a storm of protest, so thus far it has been treading warily in this sensitive matter that could unhinge Sino-Indian relations that became more fraught during the Doklam standoff.

Gwadar's commercial development

Short-term leasing rights were transferred from Singapore to China on 18 February 2013.

Later, the China Overseas Port Holding Company (COPHC) obtained a 40-year lease, according to an April 2017 announcement. Gwadar Port will cost USD1.6 billion but COPHC will be exempt from major taxes for more than 20 years. Construction of a USD230 million international airport will begin this year too.

However, as the crown jewel of the CPEC, Gwadar Port's snail-paced development seems a bit embarrassing and is perhaps an indication that not all is proceeding well on the CPEC. Proper roads and storage facilities are still sorely lacking, and the final 5km stretch of road access to the port is still incomplete. There is sufficient space for only a few cargo ships to berth simultaneously, even though trade is supposed to grow from 1.2 million tons in 2018 to about 13 million tons by 2022.

The port will have an LNG terminal and serve as a hub for regional natural gas pipelines. An oil refinery could appear in the future. Gwadar Port Authority officials say the seafront could eventually offer berths for 130 ships. In December the government approved plans to construct a shipyard with two large dry docks, with construction to take 3-5 years.

However, fishermen are still using a pier on the eastern side of the peninsular, as China's promised pier on the western side has not yet appeared. China has pledged USD500 million to residents, with a new school, doctors and promises of a hospital, technical college and water supplies. Such largesse from China is unusual, as it does not normally give such unconditional grants. This is suggestive that Gwadar is more than just an economic investment for China, as Beijing tries to win hearts and minds.

CPEC

The CPEC is expected to be completed by about 2030 at a cost of USD56 billion. Its long-term plan was approved at a Joint Cooperation Committee meeting in Islamabad on 21 November. However, the CPEC's success rests upon the completion of highways, railways and pipelines, as well as their ongoing security, through some of the most inhospitable terrain in the world.

Much is made of the movement of resources along this corridor so that China can avoid the Malacca Strait checkpoint. However, moving oil along this approximately 3,500km land route could be 7-10 times more expensive than by ship. It is therefore clear that a clear aim of the CPEC for China is strategic benefit rather than pure economics.

Most of the project's cost is being funded by low-interest or interest-free loans from Beijing via state-controlled banks. However, these loans are often at rates higher than what the World Bank or International Monetary Fund offer. Given that China accounts for two-thirds of Pakistan's trade deficit already, this imbalance could grow as the CPEC comes on stream and the country is flooded by Chinese exports.

Much of the construction offers little direct benefit to Pakistan as most contracts are awarded to Chinese firms who bring in their own labor. Interestingly, more than half of China's investment in the CPEC is for power plants, with regular blackouts debilitating Pakistan's economy. Taking the CPEC into consideration, the World Bank expects the GDP growth rate to rise from 5.5% in 2018 to 5.8% next year.

There is the potential for the CPEC to turn into an expensive white elephant for China. Because President Xi Jinping has so wholeheartedly endorsed the One Boat, One Road initiative, he cannot really withdraw without losing face either. Could this turn into Xi's greatest folly? Tom Miller, in the book China's Asian Dream, stated that Chinese officials privately admit that they expect to lose up to 80% of their investment in Pakistan.

Islamabad will have to pay for the privilege of Chinese investment too in years to come as debt mounts. Last November, Federal Minister for Ports and Shipping Mir Hasil Bizenjo revealed that 91% of revenue from Gwadar Port would go directly to China over the next 40 years. Sri Lanka, which handed China a 99-year lease in exchange for lighter debt repayments after being saddled with debt over the Hambantota Port project, could give Pakistan a premonition of what to expect.

China is not having it all its own way, though. Pakistan rejected China's idea of using the yuan in the Gwadar Free Zone, plus it rejected Chinese terms for a USD14 billion plan to build the Diamer-Bhasha Dam.

Security of the CPEC is a critical factor. More than 50 workers have been killed by Baluchistan insurgents since 2014. Pakistan created a 15,000-member army security division to protect CPEC infrastructure. There are some commentators who suspect a major terrorist attack could give China the requisite pretext to move PLA troops onto Pakistani soil.

Pakistan envisions the CPEC connecting to Afghanistan and Central Asia as well. China is expanding investment so as to include Afghanistan, this news coming from a trilateral Afghanistan-China-Pakistan meeting in late December. The CPEC can help China to stabilize Pakistan, as well as reduce the risk of violence in bordering Xinjiang.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)